What Is the Difference Between Gross Salary And CTC?
Ever got excited about a job offer because the salary looked amazing—then felt confused when your bank account didn’t match up? You’re not alone. Salary terms like CTC and gross salary get tossed around a lot, but most of us never get a straight explanation.
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That’s where the confusion starts—and where this article comes in. Understanding the difference between gross salary and CTC isn’t just HR jargon; it’s the key to knowing how much you’ll actually take home every month. Let’s break it down into plain English—no finance degree is required.
What Is CTC? (Cost to Company)
CTC sounds fancy, but it’s really just the full amount a company is willing to spend on you in a year. Think of it as the price tag the company puts on you—not just your salary, but everything they’re covering on your behalf.
This includes your basic salary, bonuses, HRA, medical insurance, PF contributions, gratuity, and maybe even a meal card or cab service. Some of it you get in cash, and some you don’t see directly—but it still counts as part of your total package.
So when you hear “your CTC is ₹10 lakh,” don’t assume that’s what hits your bank account. That’s just the overall cost the company bears for hiring you. Your actual monthly earnings will be less once deductions come into play.
Understanding this difference is step one in figuring out what you’re really getting paid.
What Is Gross Salary?
Gross salary is what your offer letter usually talks about—but don’t mistake it for your actual take-home pay. It’s the amount you earn before anything gets deducted. That means it includes your basic salary, HRA, and any other allowances you’re eligible for—but not the company’s extra contributions like PF or gratuity.
So, if your gross monthly salary is ₹60,000, you won’t see that full amount in your bank account. Why? Because deductions like income tax, your PF contribution, and professional tax still need to be included. After those cuts, your in-hand salary might be closer to ₹50,000.
In short:
Gross salary = your earnings before cuts
It’s part of your CTC but not the whole picture
It’s also more than your final take-home
Once you get this, your payslip starts making a lot more sense.
Difference Between Gross Salary and CTC with example
Here’s the thing: CTC and gross salary are often confused, but they’re definitely not the same. Your CTC (Cost to Company) is the total amount a company is willing to spend on you. That includes your salary, yes—but also other things like the employer’s contribution to PF, gratuity, insurance, and sometimes even extras like cab services or meal vouchers.
Gross salary, on the other hand, is just your earnings before tax and deductions—mainly your basic pay and allowances. It doesn’t include those company-paid perks or contributions.
Let’s look at a quick example. Say your CTC is ₹10 lakh per year. That sounds great, but after removing things like employer PF and gratuity, your gross salary might come down to ₹8.2 lakh. That’s still before taxes and deductions, so your in-hand salary will be even lower.
Why This Difference Matters?
A lot of people make the mistake of thinking their CTC is what they’ll actually take home. It’s not. That’s why knowing the difference really matters—especially when you’re switching jobs or comparing offers.
Two companies might offer the same CTC, but your actual earnings could look very different depending on how the package is structured.
Understanding the gap between CTC and gross salary helps you plan better—whether it’s budgeting your monthly expenses, figuring out your savings, or just avoiding that end-of-month “where did my money go?” moment.
FAQs
How Do You Calculate Gross and Net Salary From CTC?
Start with your total CTC. Now subtract the employer’s share of PF, gratuity, insurance, and any other perks you don’t directly receive. That gives you your gross salary.
To get a net salary, take your gross salary and deduct your income tax, employee PF, and professional tax (if applicable).
Which Is Bigger: Gross Pay or Net Pay?
Gross pay is always bigger.It’s your salary before anything is deducted from it.
Net pay (or in-hand salary) is what you get after tax, PF, and other deductions are taken out.
What Is the Difference Between CTC Vs. In-Hand Salary?
CTC includes everything—your salary + benefits + what the company pays on your behalf. In-hand salary is what actually gets credited to your account every month.
How Do You Calculate Net Salary from Fross Salary?
Take your gross salary and subtract things like:
Income tax
Your PF contribution
Professional tax (if applicable)
That’s your net salary—your real take-home.